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Continued: Bernanke tells lawmakers Fed's timetable for slowing its bond purchases not on a preset course

  • Article by: MARTIN CRUTSINGER , AP Economics Writer
  • Last update: July 17, 2013 - 4:25 PM

"We don't think this forward guidance could be much clearer," Dales said.

Bernanke spent a good part of the three-hour hearing addressing other topics beyond the Fed's low interest rate policies:

— He reminded lawmakers that their fiscal policies are having an adverse effect on the economy. Higher taxes and deep federal spending cuts could reduce growth by 1.5 percentage points this year. Bernanke said the impact of those policies should begin to wear off in the second half of this year, but there was a risk that the damage could linger.

— He warned that a failure by Congress to approve an increase in federal government's $16.7 trillion borrowing limit sometime this fall could be harmful to the economy and unsettling to financial markets.

— He said regulators have more work ahead to put the 2010 financial overhaul law into effect. Additional rules must be written to reduce the risk of financial firms collapsing and bringing down the financial system. Thanks to the overhaul rules that have been put in place, that possibility is less likely, but the threat "is not gone," Bernanke said.

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